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Abercrombie’s Q3 direct-to-consumer sales tick up

The third quarter was yet another “challenging” period for young adult apparel manufacturer and retailer Abercrombie & Fitch Co., says Arthur Martinez, the retailer’s executive chairman.

Revenue for the multichannel retailer, No. 58 in the Internet Retailer 2016 Top 500 Guide, fell more than 4%. Even so, Martinez points to growth in the retailer’s direct-to-consumer sales, which include web transactions and sales placed online within a store, as a point for optimism.

Abercrombie is in the midst of a campaign to remake its identity as the “acceptable American casual luxury brand for today's twenty-something consumer," said Fran Horowitz, president and chief merchandising officer, on a conference call with analysts. The campaign includes a complete reboot of its social media presence with new digital advertising messages across all platforms, as well as marketing that reaches the consumer while they are outside their homes, she said.

The retailer also revamped its sites, adding ratings and reviews to Abercrombie.com, which Horowitz said has resulted in a "strong" initial reponse. In September it also gave shoppers the ability to cross-navigate and transact across the Abercrombie adults and kids brands through a single website. That change has resulted in higher average order sizes on mixed basket transactions and lower shipping and handling costs.

For the fiscal third quarter ended Oct. 29, Abercrombie reported:

Total revenue of $821.7 million down 6.5% from $878.6 million from fiscal Q3 2015.

Direct-to-consumer and omnichannel sales accounted for 23% of net sales, up from 21% a year earlier. That translates to an estimated $189.0 million in direct-to-consumer sales, up 2.4% from an estimated $184.5 million.

Comparable-store sales, which include U.S. and international, declined 6%. U.S. comparable-store sales also decreased 5%. Comparable-store sales do not include e-commerce.

Net income was $8.3 million compared with $42.3 million.

For the first nine months of the fiscal year, Abercrombie reported:

Total revenue of $2.290 billion down 4.8% from $2.406 billion in the same period of fiscal 2015.

Direct-to-consumer and omnichannel sales of an estimated $533.6 million, up 2.7% from an estimated $519.4 million.